Department of Justice seeks to block American Airlines-US Airways merger

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In a stunning twist to the long running saga of the American Airlines-US Airways merger, the U.S. Department of Justice has filed a lawsuit to prevent the merger from closing.  Until this morning, there was every indication that the merger was on track to close this fall.

The main argument put forth so far is that allowing American and US Airways to merge would create too few airlines in the industry, thus harming competition and leading to higher prices for consumers.  This is a fine theoretical argument, until you realize that the same Department of Justice previously allowed mergers to create the current competitive landscape, dominated by “mega carriers” such as Continental/United (now United) and Delta/Northwest (now Delta).  While higher prices harming consumers is a very real issue, so is allowing merged giants like Delta and United to keep American and US Airways at a competitive disadvantage.

For frequent flyers, nothing changes just yet.  The airlines had not progressed far enough in their merger plans to link frequent flyer programs, so for now everything remains the same.  American Airlines travelers should continue posting miles to their AAdvantage accounts, while US Airways travelers should continue posting miles to their Dividend Miles accounts.

For those planning for 2014 elite status based on a combined elite qualifying miles (a combination of qualifying miles in each account), you will need to rethink your strategy, as today’s complication means that it’s very unlikely the merger will close this year as planned.

AA-US

Photo credit: aadvantagegeek

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